What is an Employment Contract?
Employee Agreement specifies terms and conditions of employment of an employee in the organisation he is or will be working for. Employment Agreement is a contract commonly entered into when a business hires a new employee. It can be used for a range of different employment types, including full time, part time and fixed term or Contract.
This Agreement sets out all of the terms of employment, including job duties, salary and benefits, work hours, confidentiality, annual leave and various other key terms.
In many cases, once an employer chooses to take on a new employee, the parties want to get started without delay. The employer may, therefore, wish to first provide the employee with a letter which spells out some of the key terms more briefly. In these situations, employers may wish to use a Letter of Offer for Employment, and then to follow it up with this Employment Agreement.
An Employment Agreement is not always suitable for use by contractors. The contractors are recommended to use another legal agreement called Service Agreement.
Advantages of Employment Agreement
- Safeguard Interest of Employer
- Safeguard Interest of Employee
- Set Expectations
- List Down Laws of Employment
Importance of Employee Agreement
Easy 3 Step Process of Employment Agreement:
Three Easy Step Process of getting Employee Agreement from Best Lawyers of India.
Log in LegalDocs portal for Employee agreement.
Drafting: Share basic details of Employer and Employee like Name, Address, Designation, and few easy question for understanding of employee contract. Best employee lawyers will draft the employee agreement for you. This draft will be shared with for you review and approval. If any changes are desired according to business need our Lawyers will be able help you by modification of draft.
Approval and Singing: Once the Employee agreement is ready by Lawyer, you will get a copy of agreement, both parties, Employee and Employer will be able to sign the agreement with ease using AADHAR esign. This Document can be signed by physically as well on the letterhead of company or non judicial stamp denomanation.
An Employment Agreement can be used by employers that hire a new employee, whether on a full-time, part-time, fixed term, casual or some other basis.
The employment agreement should be printed on stamp paper and then both the employer and the employee will need to sign the document and keep a copy for their own records.
Is it mandatory to print the Employment Contract on Stamp Paper?
It does not matter whether an agreement is printed on a letter head of the company, on a plain paper or on a stamp paper. What matters is whether proper stamp has been paid on the agreement or not? (which differs from state to state).
Section 17 of the Indian Stamp Act, 1899 states that “All instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution” and Section 2(14) of the same act defines “Instrument” as “every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded”. Thus, going by the provisions of the Indian Stamp Act, 1899 it can be concluded that it will be legally favourable to choose to pay a rihght amount of Stamp Duty, which differs from state to state, on Employee Agreement to maintain its legal validity.
Employment Contract Laws:
The employment may be subject to the terms and conditions of the applicable Shops and Establishments Act or Factories Act depending on the nature of activity carried on by the employer. Each State in India has its own Shops and Establishments Act which lays down certain terms regarding working hours, overtime etc.
What to include in a Employment Contract?
- Name Of Employer
Each draft must content details of Employer. Legal entity of employer is mentioned with its registered address is mentioned. Name and Identity of signing authority from employer side is also cleared mentioned in the Employee agreement. In case of arbitration of Legal Notice this name address plays a big roll.
- Name of Employee
Name and Identity of employee is cleared mentioned in the agreement. Purpose for Employee details is to clearly state the legal entity represented the name. It will be useful at the time of conflict or pronunciation of punishment if any.
Employee agreement is a Legaly binding document to both parties. To reduce miscommunication or misinteroritation, all the definations of terms will be discribed on this section. This will help both parties to understand exact meaning of each legal terminology and legal jargons used.
- List of Clauses governing Employee agreement
This is critical part of Employee agreement. Clauses will define the nature of Employee agreement. This will quantify scope of work for both parties.
- Stamp Duty if Involved
Many Employee Agreements do not require stamp duty to be paid. If stamp duty payment is required by nature of Employee agreement, stamp duty need to be paid on the employee agreement according state rules. Each state has different rules. Consult with LegalDocs expert to know more about stamp duty rules.
- Signature of Both Parties
Signature of Both Parties is vital element of the Employee agreement, By Singing both parties give consent for acceptance of the terms and condition of employee agreement. By signing the documents both parties will be liable for outcomes of the agreement in case of breach of agreement.
List Clauses covered in Employment Agreement?
- Duties and responsibilities of Employer and Employee
Duties and responsibilities of the employee must be clearly defined in the employment agreement. As well responsibility of employer is also mentioned in the employee agreement.
- Working Hours and Leaves
The normal working hours and days for the employee must be mentioned in the employment agreement. Working hours are governed by the Shops & Establishment Act. Shop & Establishment Laws takes care of safety and security of the employee. Hence, its important to be keep in mind the same while drawing the employment agreement.
- Salary and Remuneration
Salary is very import term for all employees. It is the return value for employee what he is putting in terms of effoerts. In India salaries are paid on monthly basis to full time employees. Salary Structure and Amount of Salary need to mentioned clearly in employee agreement. Notice period for change in salary should also mentioned in the agreement.
- Dual Employment
To safeguard the interest of the employer, employee should not take multiple jobs at one point. it is important to add clauses prohibiting the employee from taking up any other employment during the course of this employment contract.
- Non Disclosure and Confidentiality
Non Disclosure and Confidentiality is biggest issue to many employers. If employee day to day or any duty and responsibility involve working in a position wherein they would come to know about sensitive information like trade secrets, Intellectual property or confidential information of the business, it is important for the employer get non disclosure agreement signed from employee. In case of highly specialised employment involving extensive disclosure of confidential information to the employee, a separate employee non-disclosure agreement can be executed as well.
- Intellectual Property rights
Any organisation puts lot of efforts to educate employees on new trends and business requirements. A lot of intellectual property is created employees on day to basis. To protect this IP from misuse or personal use, employers ask for IP rights, which states that all the IP created in the employer's premises or using employer infrastructure like internet, laptop, place or any other device. Employee has to declare that all the IP created or used for employers will have sole right for employer.
- Non Compete Clause
Many employees learn the trade secret, and create a competition for its employer by starting a same business and porch the existing customers.
To stop this practice and safeguard the business, employer add clauses like non compete, where employee is not permitted to start a similar business as well as can not join other organisation which is in direct competition.
- Termination of Employment
it is important for all employment contract to have a clause for termination of employment. The grounds and terms on which the employment contract can be terminated must be clearly provided.
In case of the breach of contract, both parties will be approaching to predefined Arbitration Authority